sc13da807845mak_07152012.htm

0000921895-12-001507.txt : 20120716 0000921895-12-001507.hdr.sgml : 20120716 20120716090754 ACCESSION NUMBER: 0000921895-12-001507 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20120716 DATE AS OF CHANGE: 20120716 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MAKEMUSIC, INC. CENTRAL INDEX KEY: 0000920707 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 411716250 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-50055 FILM NUMBER: 12962740 BUSINESS ADDRESS: STREET 1: 7615 GOLDEN TRIANGLE DRIVE STREET 2: SUITE M CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 BUSINESS PHONE: 952-906-3690 MAIL ADDRESS: STREET 1: 7615 GOLDEN TRIANGLE DRIVE STREET 2: SUITE M CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 FORMER COMPANY: FORMER CONFORMED NAME: MAKEMUSIC INC DATE OF NAME CHANGE: 20020522 FORMER COMPANY: FORMER CONFORMED NAME: NET4MUSIC INC DATE OF NAME CHANGE: 20001113 FORMER COMPANY: FORMER CONFORMED NAME: CODA MUSIC TECHNOLOGY INC DATE OF NAME CHANGE: 19950531 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LaunchEquity Partners LLC CENTRAL INDEX KEY: 0001355154 IRS NUMBER: 412181415 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 8585 EAST BELL ROAD SUITE 100 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 BUSINESS PHONE: 480-563-3997 MAIL ADDRESS: STREET 1: 8585 EAST BELL ROAD SUITE 100 CITY: SCOTTSDALE STATE: AZ ZIP: 85260 SC 13D/A 1 sc13da807845mak_07152012.htm AMENDMENT NO. 8 TO THE SCHEDULE 13D sc13da807845mak_07152012.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 8)1

MakeMusic, Inc.

(Name of Issuer)

Common Stock, $.01 par value

(Title of Class of Securities)

56086P202

(CUSIP Number)

STEVEN WOLOSKY, ESQ.

OLSHAN FROME WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

July 15, 2012

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 56086P202

1	NAME OF REPORTING PERSON LAUNCHEQUITY ACQUISITION PARTNERS, LLC DESIGNATED SERIES EDUCATION PARTNERS
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC, AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,362,829
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,362,829
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,362,829
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.0%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 56086P202

1	NAME OF REPORTING PERSON LAUNCHEQUITY PARTNERS, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION ARIZONA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,362,829
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,362,829
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,362,829
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.0%
14	TYPE OF REPORTING PERSON OO

CUSIP NO. 56086P202

1	NAME OF REPORTING PERSON ANDREW C. STEPHENS
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,362,829
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,362,829
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,362,829
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.0%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 56086P202

1	NAME OF REPORTING PERSON JANE KIM
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER - 0 -
	8	SHARED VOTING POWER 1,362,829
	9	SOLE DISPOSITIVE POWER - 0 -
	10	SHARED DISPOSITIVE POWER 1,362,829
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,362,829
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.0%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 56086P202

The following constitutes Amendment No. 8 to the Schedule 13D filed by the undersigned (“Amendment No. 8”). This Amendment No. 8 amends the Schedule 13D as specifically set forth herein.

Item 4.

Purpose of Transaction.

Item 4 is hereby amended to add the following:

On July 15, 2012, the Reporting Persons sent a letter to the Board of Directors of the Issuer (the “July 15 Letter”) describing the Reporting Persons’ belief that the Issuer is in need of aggressive strategic leadership and offering to acquire the operating assets, excluding cash (the “Assets”), of the Issuer for $13.5 million (the “Offer”). The Offer is conditioned upon, among other things, the Issuer adopting a plan of liquidation simultaneously with shareholder approval of the sale of Assets, which the Reporting Persons believe should enable the Issuer to distribute approximately $4.30 per Share to shareholders.

The foregoing description of the July 15 Letter is qualified in its entirety by reference to the July 15 Letter, which is attached as exhibit 99.1 hereto and is incorporated herein by reference.

Item 5.

Interest in Securities of the Issuer.

Item 5(a) is hereby amended and restated to read as follows:

(a) The aggregate percentage of Shares reported owned by each person named herein is based upon 4,859,644 Shares outstanding, which is the total number of Shares outstanding as of April 29, 2012, as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 11, 2012.

As of the date hereof, LEAP owned directly 1,362,829 Shares, constituting approximately 28.0% of the Shares outstanding. By virtue of their relationships with LEAP discussed in further detail in Item 2, each of LEP, Andrew C. Stephens and Jane Kim may be deemed to beneficially own the Shares owned directly by LEAP.

Item 7.

Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibit:

99.1

Letter to the Board of Directors, dated July 15, 2012.

CUSIP NO. 56086P202

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: July 16, 2012	LAUNCHEQUITY ACQUISITION PARTNERS, LLC DESIGNATED SERIES EDUCATION PARTNERS

	By:	LaunchEquity Partners, LLC Manager

	By:	/s/ Andrew C. Stephens
		Andrew C. Stephens Managing Member

	LAUNCHEQUITY PARTNERS, LLC

	By:	/s/ Andrew C. Stephens
		Andrew C. Stephens Managing Member

	/s/ Andrew C. Stephens
	ANDREW C. STEPHENS

	/s/ Jane Kim
	JANE KIM

EX-99.1 2 ex99113da807845mak_071512.htm LETTER TO THE BOARD OF DIRECTORS ex99113da807845mak_071512.htm

Exhibit 99.1

LAUNCHEQUITY PARTNERS, LLC

4230 N. Oakland Avenue #317

Shorewood, WI 53211-2042

July 15, 2012

BY FEDEX AND FACSIMILE

Board of Directors

MakeMusic, Inc.

7615 Golden Triangle Drive, Suite M

Eden Prairie, MN 55344-3848

Attention:	Robert B. Morrison, Chairman
	Graham Richmond, Director

Gentlemen:

As you know, LaunchEquity Partners, LLC (“LEP”) and LaunchEquity Acquisition Partners, LLC Designated Series Education Partners (together with LEP, “LaunchEquity”), is your largest shareholder, and our investment in MakeMusic, Inc. (“MMUS”) dates back to February 2006. MMUS is facing a difficult road ahead as a new leader needs to be hired with the recent departure of MMUS’s latest chief executive officer at a time when the company is in the midst of an expensive and difficult refresh of its products while also facing intensified competition. While we have considered remaining a large minority owner, the reality is that we have not seen enough evidence that the rewards of such a strategy outweigh the risks. For the reasons described below, we cannot simply sit idly by any longer. The lack of material revenue and profit growth, the steep decline in the company’s notation product line, the recurring turnover of senior leadership and the accelerating level of spending during the six years that LaunchEquity has been a shareholder has led us to conclude that MMUS is in need of aggressive strategic leadership.

In addition to MMUS’s operational issues, we are faced with a number of legal hurdles relating to our investment in MMUS. In February 2012, you adopted a 4.9% NOL “poison pill” that effectively eliminated any trading liquidity in MMUS’s shares, essentially turning the company into a semi-private entity without the opportunity to attract any significant new, institutional shareholders. In addition, pursuant to the terms of the settlement agreement between MMUS and LaunchEquity and the complexities of the Minnesota Share Control Act, LaunchEquity cannot in a simple way seek to increase its beneficial ownership to a majority level and exert more direct influence. Therefore, for the reasons described below, we have determined that the only real choice is to propose to acquire MMUS.

We hereby propose directly or through a newly-created entity to purchase the operating assets of the company, excluding cash, and assume the related liabilities, of MMUS (the “Assets”), free and clear of all liens and encumbrances, for $13.5 million. Including the cash retained by MMUS, our offer values the business at approximately $21.2 million. We have calculated the purchase price on the basis of publicly available information. Our offer is conditioned upon, among other things, MMUS adopting a plan of liquidation simultaneously with shareholder approval of the sale of Assets, which we believe should enable MMUS to distribute approximately $4.30 per share to shareholders. Such amount represents a 20% premium to the closing share price on July 13, 2012. We would explore with MMUS ways to maximize the cash that would be distributed in such liquidation.

July 15, 2012

Page 2

We project that we will also need to inject at least $10 million over the next two years to (a) recruit and retain a new CEO, (b) upgrade both the Notation and SmartMusic software product lines and (c) cover working capital and seasonal liquidity needs. LaunchEquity is prepared to take these difficult steps to revive MMUS.

Our offer is subject to MMUS’s agreement to liquidate following the closing of the sale of Assets and standard conditions, including, but not limited to, (a) satisfactory completion of our legal and operational due diligence investigation; (b) the board of directors and shareholders of MMUS approving the transaction; (c) the parties’ execution of a mutually acceptable definitive purchase agreement (the “Definitive Agreement”) and all necessary ancillary agreements; (d) the receipt of any regulatory approvals and third party consents, on terms satisfactory to LaunchEquity; (e) retention of key employees on terms acceptable to LaunchEquity; and (f) there being no material adverse change in the business, results of operations, condition (financial or otherwise) or assets of MMUS. However, our offer is not subject to a financing condition. Further, it is our intention to retain MMUS’s employees as we view them to be a significant asset of the company.

We understand that the Board of Directors has a fiduciary obligation to MMUS’s shareholders. Therefore, while we stand ready and able to buy MMUS, we encourage you to hold an open and friendly “go-shop” sale process where prospective buyers are offered due diligence and invited to bid while providing us with a contractual last look right. We would consider as part of the Definitive Agreement an agreement to vote our shares in favor of a proposal to acquire the stock or assets of MMUS that is in our view clearly superior to our proposal and would expect an appropriate break-up fee.

We would expect that from and after the date of this letter, the Board will authorize MMUS’s management to allow LaunchEquity and its advisors full access to MMUS’s facilities, records, key employees and advisors for the purpose of completing its due diligence review. The due diligence investigation will include, but is not limited to, a complete review of the financial, legal, tax, environmental, intellectual property and labor records and agreements of MMUS, and any other matters as LaunchEquity’s accountants, tax and legal counsel, and other advisors, deem relevant. We are prepared to execute an appropriate confidentiality agreement in connection therewith.

Simultaneously with our due diligence investigation, we are prepared to negotiate the Definitive Agreement relating to LaunchEquity’s acquisition of the Assets, to be drafted by LaunchEquity’s counsel. The Definitive Agreement would include the terms summarized in this letter and such other representations, warranties, conditions, covenants, indemnities and other terms that are customary for transactions of this kind and are not inconsistent with this letter.

July 15, 2012

Page 3

We would expect that during the period from the date of this letter through the execution of the Definitive Agreement, MMUS will (a) conduct its business in the ordinary course in a manner consistent with past practice, (b) maintain its properties and other assets in good working condition (normal wear and tear excepted) and (c) use its best efforts to maintain its business and employees, customers, assets and operations as an ongoing concern in accordance with past practice.

We did not enter this decision lightly. Regarding the form of purchase, we understand that a significant amount of MMUS’s long-term NOL expired last year without being offset with income from operations. We further understand that a significant amount of the MMUS’s remaining NOL will expire at the end of 2012, and the company does not appear poised to fully leverage this asset through higher profitability. However, we believe that an asset sale that closes in 2012 is an effective way to utilize this tax asset by offsetting any gain realized on the sale of the Assets. This would effectively increase the amount of cash that could be distributed to MMUS’s shareholders.

As we stated above, we believe that MMUS requires significant intervention now for the following reasons:

·	significant leadership changes - MMUS has had four CEOs in the last four years and now has to recruit a fifth CEO. Not only is this expensive and time consuming, it is very disruptive to the organization and to the company’s relationship and standing with industry partners.

significant development costs ahead - we believe that the source code base of Finale and the other notation products is near end of life and significant financial resources are necessary to update and refresh the notation product line. A review of recent quarterly financial reports makes clear that the company’s expenses are rising while its balance sheet is contracting. This suggests a period of heavy investment ahead.

·	significant revenue decrease in 2012 and beyond appears likely for the following reasons -

o	we believe that the current Finale product release will be a partial upgrade versus the typical annual refresh and re-release cycle, which would generate higher revenues.

o	SmartMusic subscription growth has stalled while spending on its development and marketing continue to rise. We believe that shareholders have much higher expectations for SmartMusic subscriber levels and are disappointed with this stagnation.

July 15, 2012

Page 4

the largest print music publisher, Hal Leonard Corporation (“HLC”), announced in late 2011 its entry into the digital music publishing, education and performance evaluation software market with its Essential Elements Interactive platform. We understand that HLC is using a more modern software platform. We believe this is a direct competitive threat to MMUS’s SmartMusic product suite and it will come from the largest industry participant that is also a significant contributor of content for SmartMusic. If MMUS cannot access quality content from HLC, SmartMusic’s allure in the marketplace is likely to be seriously damaged and the company may face increased repertoire development costs from other sources.

We are prepared to enter into immediate negotiations with you so that the company could commence this process now.

Very truly yours,

/s/ Andrew C. Stephens

Andrew C. Stephens

cc:	Steve Wolosky, Esq.